Go Back   Trade2Win Forums > Financial Markets > Indices > US Indices
When a market gaps down, whats causes price to go up? When a market gaps down, whats causes price to go up?
Site Guidelines | New Posts | Register Mark Forums Read

When a market gaps down, whats causes price to go up?

This is a discussion on When a market gaps down, whats causes price to go up? within the US Indices forums, part of the Indices category; When a market gaps down on the open the next day, why does price often immediately rise, fill the gap, ...

Reply
Sponsored By ChoiceTrade Share thread with:  Submit to Digg Submit to Facebook
 
LinkBack Thread Tools
Old Jul 16, 2009, 1:51pm   #1
Senior Member
 
Join Date: Mar 2009
Posts: 238
When a market gaps down, whats causes price to go up?
When a market gaps down on the open the next day, why does price often immediately rise, fill the gap, and then sometimes fall again?

vice versa for gapping up
SanMiguel is offline   Reply With Quote
Old Jul 16, 2009, 2:07pm   #2
Veteran Member
 
Join Date: Dec 2008
Posts: 600
tripleogstar's Trading Profile
gud question. I am not entirely sure to be honest, but I would think it is partly to do with pre market auctions.
tripleogstar is offline   Reply With Quote
Old Jul 16, 2009, 2:09pm   #3
Senior Member
 
Join Date: Mar 2009
Posts: 238
SanMiguel started this thread
Quote:
Originally Posted by tripleogstar View Post
gud question. I am not entirely sure to be honest, but I would think it is partly to do with pre market auctions.
Does it almost always happen? If so, don't people take advantage of it with a quick trade.
Gap down, buy.
Gap up, sell.
SanMiguel is offline   Reply With Quote
Old Jul 16, 2009, 2:14pm   #4
Senior Member
 
Join Date: Feb 2009
Posts: 124
Not the only reason, but perhaps part of the reason: Suppose you were short at yesterdays close, you wake up and market gaps down. You've gained some money, and today's trading is uncertain so you might then take some profits which pushes price up.

People do try to take advantage of gaps, but they don't always fill the next day. THere are different types of gaps - exhaustion, breakaway etc.
Shakone is offline   Reply With Quote
Old Jul 16, 2009, 3:41pm   #5
Senior Member
 
Join Date: Apr 2008
Posts: 174
If the market opens way out of line from where it should be relative to other similar markets (i.e. someone put a big order at quite a high/low price in the opening auction) then it will naturally move back in line with the other markets through a combination of people taking advantage of the good price, people not wanting to get shafted at the bad price and spreaders and computers moving the price back in line.

Before trying to trade an opening gap make sure you know what the other markets have done and are on top of any fundamental news that might have come out.
Aspire is offline   Reply With Quote
Old Jul 16, 2009, 4:05pm   #6
Senior Member
 
Join Date: Mar 2009
Posts: 238
SanMiguel started this thread
Quote:
Originally Posted by Aspire View Post
If the market opens way out of line from where it should be relative to other similar markets (i.e. someone put a big order at quite a high/low price in the opening auction) then it will naturally move back in line with the other markets through a combination of people taking advantage of the good price, people not wanting to get shafted at the bad price and spreaders and computers moving the price back in line.

Before trying to trade an opening gap make sure you know what the other markets have done and are on top of any fundamental news that might have come out.
Not massive gaps, I mean NASDAQ gapped down 30 points at open today and seems to this fairly regularly, then filled the gap, then moved down, and in the last few hours has moved above open again by a few points.
SanMiguel is offline   Reply With Quote
Old Jul 16, 2009, 4:39pm   #7
Senior Member
 
Join Date: Jan 2008
Posts: 177
Quote:
Originally Posted by SanMiguel View Post
When a market gaps down on the open the next day, why does price often immediately rise, fill the gap, and then sometimes fall again?

vice versa for gapping up

Profit taking. Those that were lucky to be short cover positions. Money moves the world.
intradaybill is offline   Reply With Quote
Old Jul 20, 2009, 1:08pm   #8
Legendary Member
 
N Rothschild's Avatar
 
Join Date: Oct 2008
Posts: 3,423
N Rothschild's Trading Profile
its a self fulfilling prophecy that's all. market gaps need to be filled, there for people buy/sell in order to make money on the anticipation of the gap being filled, which in its self causes the gap to be filled. simples
__________________
"Let me issue and control a nation's money and I care not who writes the laws." Mayer Amschel Rothschild

Bullsh!t, Bearsh!t all smells the same to me!
N Rothschild is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools


Similar Threads
Thread Thread Starter Forum Replies Last Post
What happens to stop when market gaps SanMiguel UK Shares 33 Jul 13, 2009 2:24pm
Pre-Market Gaps Over the Top Day Trading & Scalping 1 Jun 20, 2009 8:58am
Whats stock price got to with a company? trendie Equities 12 Nov 6, 2008 10:48am
EOD price gaps? josephjah Data Feeds 4 Sep 23, 2008 5:53am
Price spikes/gaps in the wee small hours JTrader Forex Discussion 0 Jul 5, 2007 5:40am


New To Site? Need Help?


All times are GMT -4. The time now is 3:43am.


Copyright © 2001-2009 Trade2Win Ltd